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Investment Stewardship2019 in focus: Australia and New Zealand
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In focus: Australia and New ZealandVanguard funds own shares in nearly 13,000 public companies around the world. In the 12 months ended 30 June 2019, the Vanguard funds voted 1,801 proposals at 364 meetings for Australia- and New Zealand-based companies across all major sectors. In addition, we emphasised our engagement efforts in this region and directly engaged with 29 companies in 2019.
While we recognise regional market variations, our approach remains consistent globally.
In December 2017, Australia launched a public inquiry—the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry—to investigate company misbehaviour. The commission found breaches of legal obligations, policies and procedures, company culture, and management and board oversight. Evidence of these governance failings led us to engage with Australian financial firms. Over the past two years, our engagements have evolved from understanding what triggered company missteps to discussing ways of mitigating future failings.
We found, and companies echoed, that board oversight of company culture would be a key area of focus as they move forward after the inquiry. We understand that it is difficult for boards to assess company culture. Yet we have had constructive conversations exploring how both positive and negative news gets elevated to a board swiftly, what steps the board takes to ensure that company culture aligns with the espoused values and how the board can identify and mitigate potential areas of cultural concern.
In mid-2018, in an effort to support improved governance practices, the Australian Securities Exchange updated its Corporate Governance Principles and Recommendations. We provided our perspective on the enhanced principles, which were published in February 2019. We support them and are optimistic that companies will adopt the suggested best practices to try to prevent future governance failings.
29Companies engaged
$31 billionTotal engaged equity
assets under management
42%Of Australia and New Zealand
AUM engaged
Regional trend: Oversight of company culture
2019 highlights
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Investment Stewardship at a glance
In focus: Australia and New Zealand
Proxy voting history
Summary of proxy votes cast by Vanguard funds for companies in Australia and New Zealand (1 July 2018–30 June 2019)
2% of equity AUM | 364 meetings
2018 2019Alignment with our principles Proposal type
Number of proposals % for
Number of proposals % for
Board composition
Management proposals
Elect directors 822 91% 758 90%
Other board-related 21 43% 13 15%
Shareholder proposals
Board-related 7 0% 19 16%
Oversight ofstrategy andrisk
Management proposals
Approve auditors 59 100% 53 100%
Shareholder proposals
Environmental/social 10 0% 9 11%
Executiveremuneration
Management proposals
Executive remuneration 296 97% 288 94%
Other remuneration-related 439 97% 440 95%
Shareholder proposals
Remuneration-related 0 NA 0 NA
Governance structures
Management proposals
Governance-related 65 100% 65 98%
Shareholder proposals
Governance-related 6 0% 7 0%
Other proposals
Management proposals
Capitalization 92 99% 98 100%
Mergers and acquisitions 48 100% 46 100%
Adjourn/other business 6 100% 4 100%
Shareholder proposals
Other 5 0% 1 0%
Total 1,876 93% 1,801 91%
Company engagements
The following table lists the 29 companies that Vanguard’s Investment Stewardship team engaged with in Australia and New Zealand during the 12 months ended 30 June 2019. A bullet (•) indicates a primary topic of the engagement. However, these are open dialogues and can cover a wide range of issues over multiple discussions. Secondary topics often come up.
For context, board composition discussions can cover topics such as board independence, tenure, and diversity. When we discuss oversight of strategy and risk, we want to know whether the board understands how the company will remain relevant over the long term in the context of all relevant risks. Our discussions on executive remuneration look at pay in comparison with relevant peers and its linkage to long-term performance benchmarks. Our meetings about governance structures focus on companies’ provisions that support—or limit—shareholders’ ability to effect change over time through their voice or their vote.
Market Company nameBoard
composition
Oversight of strategyand risk
Executive remuneration
Governance structures
Australia AGL Energy Ltd. •
AMP Ltd. • • •
APA Group • • •
Ardent Leisure Group Ltd. • •
Australia & New Zealand Banking Group Ltd.
• •
Australian Agricultural Co. Ltd. • • •
Aventus Group •
Boral Ltd. • • •
Brickworks Ltd. • • •
Commonwealth Bank of Australia • •
Fortescue Metals Group Ltd. • •
Goodman Group • •
Investa Office Fund •
Macquarie Group Ltd. • •
Mirvac Group • • • •
National Australia Bank Ltd. • •
Northern Star Resources Ltd. • • •
Orora Ltd. • •
Propertylink Group • •
QBE Insurance Group Ltd. • •
Scentre Group • • •
South32 Ltd. • • • •
Star Entertainment Grp Ltd. • •
Stockland • • •
Wesfarmers Ltd. • •
Westpac Banking Corp. • •
Whitehaven Coal Ltd. •
Woodside Petroleum Ltd. • • •
Woolworths Group Ltd. • •
Connect with Vanguard® > vanguard.com.au
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken your circumstances into account when preparing the information so it may not be applicable to your circumstances. You should consider your circumstances and our Product Disclosure Statements (“PDSs”) before making any investment decision. You can access our PDSs at vanguard.com.au or by calling 1300 655 101. Past performance is not an indication of future performance. This publication was prepared in good faith and we accept no liability for any errors or omissions. © 2019 Vanguard Investments Australia Ltd. All rights reserved.ISEWV_AU 092019
